chapter 5

CHAPTER 5

Q1: Define "direct materials" and "indirect materials". List reasons for a large company having two separate departments to manage the purchasing of each.


Direct materials is a raw materials and other purchases that become a part of the units produced and incur expenditures that are easily traced to the units of output and included in the cost of goods sold. As opposed to indirect materials, such as office supplies. indirect materials is a materials, purchases and supplies used in the operation of the business, not directly associated with production and are part of operating expenses. As opposed to direct materials.

For examples a laptop. some of the largest shop sells their laptop including extra gifts such as bag, mouse, paddle pad, brushes, cooling fan, pen drive, screen protector and others. This all accessories items is to get the point for advertising and attract the customer to buy a laptop. a laptop is direct material and accessories laptop is indirect material. the two materials joining together, its become more advantages to attract the customers.

Large company having two separate departments because of their on regulation systems which were provided. a large company have their own department and duties. make items such as manufacturing, marketing, packaging, shipping and others. its impossible for the large company to do all many things which create one departments. so that it can more easily to maintain and make a proper procedures.

Q2: In about 200 words, describe the reasons a buyer might have for wanting to participate in an industry consortium marketplace instead of setting up its own private company marketplace.

The reason is to attract more customers to come in. The marketing consortium provides companies with professional, full-service marketing communications services and consulting expertise. Consortium is a combination of individual entities engaged in a joint venture; the firm was founded on the principles of integrated marketing communications, bringing together different disciplines in pursuit of a common purpose the success of their clients.
 

The marketing consortium has advantages and disadvantages. For examples, I have my own restaurant stall and my friend also have it. I am an expert in food and my friend expert in drink. We plan to joint venture to attract more customers and save money to rent the stall. The most popular menu is ‘Ayam Penyet’ and the main menu from my friend is ‘Pearl Milk Tea’. I have loyal customers come to dine at my stall and my friend also have it. So, we advertise our menu to customer and at the same time, we share our regular customers to attract more customers coming to our booth. We share the cost of the rental restaurant stall, bills of electricity, water, telephone, save energy and others.
 
However the disadvantage is we have big problems because of the not understanding, clashed with each other, dishonest, untrustworthy and others. In this case, our business will be not longer to continue and it will be drop.
 

In my conclusion is before we want to joint venture, we must to be a mutual understanding of each other, honestly and the most important is trust. Once the customer not believes you, it will be forever. Lastly, the company must expert about the products and skills to advertise and sell it.